It's Not That Big a Deal

The Hidden Cost of Public Health

Starting on January first of next year, the City of Philadelphia plans to impose a “soda tax” of 1.5 cents per ounce. The new law—already set to be challenged in court—has proved highly controversial, even within the political left where its revenue-raising potential is pitted against concerns over its regressive nature. The political right seems fairly uniformly unenthused.

But that’s boring. What’s really interesting is that Philadelphia’s government is avoiding calling the tax a public health measure, instead choosing to focus on the additional revenue it might generate, despite soda taxes’ endemic appeal to the public health profession.

Public health officials often laud soda taxes as a means of reducing demand for sugary drinks that are linked to obesity, diabetes, tooth decay and other maladies. The underlying economics are relatively straightforward—raise the price of soda and people will consume less of it. The hope is that doing so will reduce the incidence of the aforementioned conditions and curb associated healthcare spending.

But despite the wide approval of public health professionals, it’s far from clear that a soda tax is an appropriate solution in this scenario. Not only is there reason to doubt it’s efficacy, but in a sense, such a policy blurs the line between public and what we might call ‘private’ health in a way that marks a pernicious slide away from self-determination and seems to me unethical.

Using a tax to “correct” demand is one of the classic methods of solving collective action problems, which tend to involve public goods or open-access resources and often require regulatory oversight. President Bush’s cap and trade initiative in the 1980s, meant to reduce emissions of sulfur dioxide, is a successful example of such an endeavor.

The idea is that if a resource is shared (in this scenario, air quality), then it makes sense to have a centralized agency impose regulations to account for the “social cost” associated with its degradation. If something can be proven to affect others (without requiring an onerous amount of nuance), there’s a compelling case for using coercive public policy to address it.

That’s certainly the case when air quality is concerned. But there are key differences between air pollution and obesity; even though they both affect people’s health, one is far more likely to be incurred privately. We all breathe the same air; but your neighbor drinking a Double Gulp everyday doesn’t affect your waistline. Someone else being fat doesn’t harm you. Right?

Actually, depending on how an individual’s healthcare is paid for, that last part is up for debate.

Soda drinkers tend to be poorer, (the same is true for users of tobacco, which is subject to similar tax-based deterrence) and therefore more likely to have their healthcare publically subsidized. In a not-so-tangential sense, that means it’s very much in the interest of the taxpayer that those people be deterred from such actions. After all, any tax dollars not spent on healthcare can be spent on something else or not collected.

In my view this poses an ethical challenge—does public financing of healthcare erode beneficiaries’ sovereignty over their health-related decisions? And, if it does, what sort of precedents are we setting should America switch to a universal healthcare system, which would effectively render all health public?

It does seem to be the case that as more resources are poured into social safety nets, there is increased incentive for societies to attempt to engineer the results they want through coercive means. The resulting policies range from ethically dubious taxation to outright illiberalism.

Take, for example, the rather harsh methods by which the Danish government discourages immigration and asylum seekers: seizing assets worth more than $1,450; using policy to force assimilation (in one city mandating that pork be included on municipal menus); cutting benefits to refugees by up to 45%.

A similar situation is unfolding in Sweden, where the extensive social safety net has turned immigration into a tug-of-war between classical and contemporary liberal sentiments. The Economist writes:

The biggest battle is within the Nordic mind. Is it more progressive to open the door to refugees and risk overextending the welfare state, or to close the door and leave them to languish in danger zones?

Closer to home, Canada has recently received some scrutiny for its habit of turning away immigrants with sick children so as to not overburden its single-payer healthcare system.

Some of this might sound cruel or discriminatory. Some of it is. But these are rational responses from systems forced to ration scarce resources. In a sense, it’s the ethical response, given that governments are beholden to their taxpayers.

It’s a natural goal for public health experts, economists, and others whose jobs are to optimize society to try to promote a healthier nation. Our national health and wealth would clearly be improved if obesity, diabetes, etc. were eradicated. And yes, that could conceivably be achieved by any number of forceful policies—what about a Trump-style deportation of the obese?!

But we must consider the costs as well as the benefits of such policies. Are the potential gains worth ceding dominion of our personal decisions to rooms of “experts?” Is it possible for the conversion of health from a private to public good to coincide with our liberal values?

I don’t think so, at least not in the extreme. If health becoming a public resource means that the government must take an increasingly paternalistic and protectionist role in our society, it’s not worth whatever we might gain—or lose around the midsection. After all, if people can’t be trusted to decide what food to eat, what can we be trusted with? If a soda tax is okay, what about a tax on red meat, sedentarism, or motorcycles? Surely we’d be healthier if we did less of each.

I do believe there is an appropriate role for government to play in promoting the private health of the masses, but it’s significantly more parochial than the sort of collective action scheme fetishized by academics. To loosely paraphrase the Great Ron Swanson: people deserve the right to make their own peaceful choices, even if those choices aren’t optimal.

Side note: I would also argue that there’s some pretty heavy cognitive dissonance at play here as far as soda taxes go. The federal government hands out generous subsidies—collected from taxpayers—to corn producers that make junk food and soda cheaper to consumers. If more expensive soda is the remedy, why not remove those subsidies rather than tax consumers twice?

2 thoughts on “The Hidden Cost of Public Health”

RE: Closer to home, Canada has recently received some scrutiny for its habit of turning away immigrants with sick children so as to not overburden its single-payer healthcare system.

This is cruel. A doctor’s duty is to treat patients, Hippocratic oath, doesn’t matter how he/she does it or if she’s compensated for it, it’s what a doctor should do (good ones at least). Unless it’s a chronic illness, which I am aware Canada doesn’t turn away, a child with a cold/flu any other bugs and viruses that children are full of isn’t that hard to treat. I’ve got 2, it happens. It’s a few shots and tablets and rest and plenty of fluids at home under the care of mom and dad. You don’t want children to have prolonged illnesses like colds and flus, it’s totally unnecessary and it prevents from being active and being in fresh air, which is one of the best prevention for a lot of illnesses.

And yes, taxing soda is stupid. You are further punishing the poor again. Compared to good fruit juices, soda is much cheaper. Given the disaster in Flynt, MI – water in poor municipalities can’t be trusted now. It’s best to discourage people who eat poorly by offering access to fresh healthy foods and simple methods of preparation that doesn’t take an age, quit cutting aid to food stamps (though I’d be in favor of not allowing food stamps to purchase sodas to encourage purchase of good foods). Teaching people how to eat and prepare foods properly is the best investment on public health.